Oil and Gas Accounting

Transcription

1 Oil and Gas Accounting Steven M. Bragg

2 Chapter 1 Overview of Oil and Gas Operations... 1 Learning Objectives... 1 Introduction... 1 Essentials of Oil and Gas... 1 Oil and Gas Geology... 1 Exploration Activities... 2 Drilling and Development Activities... 3 Production Activities... 4 Nonconventional Activities... 4 Regulatory Requirements... 4 Structure of the Oil and Gas Industry... 5 Oil and Gas Business Activities... 5 Ownership Arrangements... 6 Joint Interest Operations... 8 The Land Department... 8 Mineral Interest Documentation... 9 The Authorization for Expenditure... 9 Conveyances... 9 Gas-Balancing Arrangements Derivative Commodity Contracts International Business Activities Summary Review Questions Review Answers Chapter 2 Overview of Oil and Gas Accounting Learning Objectives Introduction Cost Classifications Basis for the Successful Efforts and Full Cost Methods Property, Plant, and Equipment Accounting for Production Revenue Accounting Oil and Gas Reserves Transfers of Mineral Interests Joint Interests Interest Capitalization Asset Retirement Obligations Asset Impairment Foreign Exchange Issues Business Combinations Record Keeping Summary Review Questions Review Answers Chapter 3 Successful Efforts Method Learning Objectives Introduction Successful Efforts Method Chart of Accounts Using the Successful Efforts Method Indirect Exploration Costs Special Treatment of Acquisition Costs Delinquent Payments i

3 Internal Costs Lease Options Purchases in Fee Treatment of Unproved Property Exploratory vs. Development Drilling Costs Sufficient Progress Assessment Development Costs Special Drilling Activities Reimbursements Subsequent Events Summary Review Questions Review Answers Chapter 4 Full Cost Method Learning Objectives Introduction Full Cost Method Acquisition, Exploration, and Development Costs Production, General and Administrative Costs Cost Amortization Cost Exclusions Impairment of Unproved Properties Transfers to Proved Property Property Sales and Abandonments Treatment of Purchased Reserves Management and Service Fees Chart of Accounts Using the Full Cost Method The Ceiling Test Additional Disclosure Requirements Summary Review Questions Review Answers Chapter 5 Depreciation, Depletion, and Amortization Learning Objectives Introduction DD&A Terminology DD&A Differences for the Successful Efforts and Full Cost Methods Successful Efforts Method Full Cost Method The Unit of Production Method Full Cost Method Variations on the Unit of Production Method The Unit of Revenue Method DD&A Rate Changes Amortization of a Production Payment Interest Depreciation Issues for Nonworking Interests Accounting for Asset Dispositions Summary Review Questions Review Answers Chapter 6 Accounting for Production Costs Learning Objectives Introduction Production Activities ii

4 Treatment of Inventory Cost Accumulation Levels Sample Accounting Entries Review Questions Review Answers Chapter 7 Revenue Accounting Learning Objectives Introduction The Selling Process Division Orders Revenue Recognition Principles Revenue Recognition Application Severance Taxes Recordation of Oil Revenue Oil or Gas Used on the Premises The Gas Unit of Measure Recordation of Gas Revenue Revenue Paid to Interest Owners Flared Gas Stored Gas Take-or-Pay Arrangements Producer Gas Imbalances Pipeline Gas Imbalances Shipping and Handling Costs Summary Review Questions Review Answers Chapter 8 Reserve Reporting Learning Objectives Introduction Types of Reserves Proved Reserves Proved Undeveloped Reserves Proved Reserves under Production Sharing Arrangements Other Types of Reserves Variability of Reserve Amounts The Reserve Report Summary Review Questions Review Answers Chapter 9 Transfers of Mineral Interests Learning Objectives Introduction Accounting for Specific Transactions Nonmonetary Exchanges Free Wells Unitization Sale of an Interest in Unproved Property Sale of an Interest in an Unproved or Proved Property Obligation to Deliver a Specific Quantity of Oil or Gas Summary Review Questions Review Answers iii

5 Chapter 10 Joint Interest Accounting Learning Objectives Introduction Essential Joint Interest Transactions Recordation of Joint Costs Nonconsent Operations Materials Accounting Joint Interest Audits Summary Review Questions Review Answers Chapter 11 Interest Capitalization Learning Objectives Introduction Overview of Capitalized Interest Assets on Which to Capitalize Interest The Interest Capitalization Period The Capitalization Rate Calculating Interest Capitalization Summary Review Questions Review Answers Chapter 12 Asset Retirement and Environmental Obligations Learning Objectives Introduction Overview of Asset Retirement Obligations The Initial Measurement of an Asset Retirement Obligation Subsequent Measurement of an Asset Retirement Obligation Settlement of an Asset Retirement Obligation Overview of Environmental Obligations Measurement of Environmental Obligations Recoveries Related to Environmental Obligations Asset Retirement and Environmental Obligations Disclosures Asset Retirement Obligations Environmental Obligations Summary Review Questions Review Answers Chapter 13 Asset Impairment Learning Objectives Introduction Fixed Asset Impairment The Asset Grouping The Impairment Process Impairment Indicators The Impairment Test The Impairment Loss Assets Held for Sale Related Topics Summary Review Questions Review Answers Chapter 14 Oil and Gas Disclosures Learning Objectives iv

6 Introduction Disclosure Requirements Public Company Disclosure Requirements Proved Oil and Gas Reserve Quantities Capitalized Costs Relating to Oil and Gas Producing Activities Costs Incurred for Property Acquisition, Exploration, and Development Activities Results of Operations for Oil and Gas Producing Activities Standardized Measure of Discounted Future Cash Flows Changes in the Standardized Measure of Discounted Future Net Cash Flows Interim Reporting Summary Review Questions Review Answers Chapter 15 IFRS Accounting for Oil and Gas Learning Objectives Introduction Accounting for Mineral Resources Accounting for Stripping Costs Mineral Resources Presentation Mineral Resources Disclosures Summary Review Questions Review Answers Chapter 16 Auditor Inquiries Learning Objectives Introduction Structural Inquiries Control and Procedure Inquiries Risk Analyses Examination of Estimates Cost Analyses Revenue Analyses Receivable Analyses Inventory Analyses Workover Cost Analysis Overhead Analysis Payables Analysis Commitments Investigation Related Party Transactions Reserves Investigation Management Representations Letter Use of Outside Experts Summary Review Questions Review Answers Chapter 11 Accounting Controls Learning Objectives Introduction Controls for Property and Lease Acquisitions Controls for Exploration and Development Activities Controls for Production Controls for Nonoperators Controls for Disclosures and Reports Contractual Controls v

7 Summary Review Questions Review Answers Glossary Index vi